Vendors are a critical entity in our value chain facilitating smooth delivery of our services. Managing this relationship effectively offers us a competitive advantage. It reduces risks with third parties, ensures the integrity of our data, provides clarity into supplier processes and practices, helps avoid unnecessary fines and mitigate reputation risks. We look for a relation with our suppliers beyond procurements, contract signatures to one that offers a greater return on investments.
APSEZ has a complex supply chain spanning beyond national borders, therefore it is exposed to hidden and uncontrollable risks typically driven by ESG factors, such as natural resource depletion, human rights abuses and corruption. These risks may impact the financial performance of the Company along with the reputation and brand image.
To limit our exposure to such risks, we have initiated a process to identify ESG related risk in the supply chain and subsequently take corrective actions to mitigate the same. While onboarding, a new supplier has to sign a general contract that includes terms and conditions w.r.t. to ESG related factors mentioned in our Supplier Code of Conduct.
APSEZ understands that procurement is one of the key levelers that can stimulate local economic development. We perceive this function as a strategic partnership, which derives mutual benefits for both the Company and the Vendor/Supplier. We work towards implementing innovative measures in procurement and particularly how social and environmental criteria can be embedded in the process. We encourage small and medium local suppliers to bid for various opportunities. Majority of our procurement is from local area and most of our vendors are located in the state from where the respective entity is operating and has multifold benefits ranging from speed of delivery of services, after sale servicers, reduced cost etc.
We work in tandem with our suppliers for their development. Our techno-commercial department is in the process of developing a vendor development programme, which aims towards capacity development of our suppliers, covering areas including adaptation to new technologies, skills etc.